The risks of climate change: What you need to know now
Companies face a variety of risks due to climate change – physical as well as transitory. Physical risks include, for example, more frequent extreme weather events, rising sea levels, and higher average temperatures. Transitory risks, also known as transition risks, result from the shift toward a low-carbon economy or changes in consumer behaviour. These risks make it ever more important for companies to understand these climate changes and the resulting effects, and to integrate them into their risk management. Performing a climate risk analysis can help a company achieve this.
Here you will find an overview of our services as well as our solution for your climate risk analysis.
Climate risks: What do companies need to consider now?
Global warming has led to an increase in the regulatory requirements for corporate climate risk management. Since 2023, the EU Taxonomy Regulation has required a comprehensive analysis of physical climate risks to achieve taxonomy conformity. In addition, the Corporate Sustainability Reporting Directive (CSRD) requires European companies to report on physical and transitory climate risks, and how they plan to manage these risks, in accordance with the European Sustainability Reporting Standards (ESRS). Investors are putting increased pressure on companies to integrate climate risks and opportunities into their risk management efforts and corporate strategy. To meet these requirements, companies need verifiable climate risk management processes.
What are the specific obligations?
Companies must first identify their climate risks. The first step, therefore, is to perform a comprehensive analysis of all the physical and transitory climate threats, their effects, and their susceptibility to environmental changes (vulnerability). Companies should also analyse the extent to which they will be exposed to climate change in the future (exposure) – for example, due to their locations.
This analysis will help identify specific steps that can be taken to strengthen the company's resilience to potential climate change risks. The basis for assessing and classifying this resilience is the climate risk analysis.
By proactively assessing the climate risks, taking appropriate action, and monitoring the effects on their business model, companies can not only identify these risks but probably also avoid the pitfalls.
How Forvis Mazars can assist you
Our experts will help you to analyse your physical and transitory climate risks and establish verifiable climate risk management processes in accordance with the requirements of the EU taxonomy, the CSRD and the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD). In doing so, we collaborate with both internal and external specialists.
Contact
Sonja Klein Director - Hamburg
CSRD: Businesses can expect major changes
The Corporate Sustainability Reporting Directive (CSRD) has been in force throughout the EU since January 5, 2023. While large, publicly traded companies have already been affected by this for some time now and were able to adopt the necessary measures, the CSRD brings major changes, especially for smaller companies, in the medium term and will massively alter the nature and scope of sustainability...
ESG: Having the right data is essential
Companies continuously produce data: from purchasing to production to sales, accounting, risk analyses, and customer care, companies collect and store information, thereby producing data on internal and external processes. However, for sustainability reporting and with regard to ESG evaluation criteria and classification aspects, consolidating different kinds of data of varying quality from diverse...
Taxonomy Regulation: new disclosure requirements
The EU taxonomy is designed to pave the way for a sustainable economy that meets the Green Deal objectives and allows for a uniform EU-wide assessment of sustainable activities. The EU requirements, which have been in force since January 2022, extend the disclosure requirements for many companies and a large proportion of financial market participants with regard to non-financial information.